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Imagine that you had a perfect digital copy of the physical world: a digital twin. Then imagine this twin would enable you to combine data from siloed sources and all kind of distributed systems, allowing you to collaborate with internal and external business partners. It would also collect real time, intake sensor data and share data quickly, while providing a 360 degree view of a physical object along its life cycle. With this you start to realize the important role of the digital twin to build an intelligent enterprise.

Digital twins may take many forms, but they all capture and utilize data that represents the physical world. The huge potential across industries has been recognized and projected by various Industry Analysts and Market Researchers: The overall digital twin market - worth US$3.8 billion today - is forecasted to reach US$35.8 billion in value by 2025.

What is the reason for this explosive growth? And why today? After all, the benefits of a digital twin have been known for a while. At the beginning of the last decade, leading edge companies have explored ways to use digital models to improve both their products and processes. But the immense cost for connectivity, computing, data storage, and bandwidth required to process massive volumes of data created by digital twins postponed the widespread adoption of this concept. The digital twin trend is gaining momentum today thanks to rapidly evolving analytics and modeling capabilities. Sensors and connectivity features are nowadays included as standard configuration elements across all vehicle brands and types. Deriving insights from the data collected and finding new ways of monetizing the information along the entire value chain will boost the digital twin market additionally.

Digital “vehicle” twins in the automotive industry bring the most value if they represent the entire value chain: from research & development all the way to scrapping or even better recycling. Along this value chain, the vehicle lifecycle, several players are involved. These players reside primarily in the automotive industry - traditional OEMs, electric vehicle startups, new mobility service providers (subscription, sharing, MaaS, etc.), dealers, service stations, importers and many more. However, other players from other industries are also interested in vehicle data. We mainly see insurance companies (think of rates based on your driving behaviour), utilities (especially in the area of electrified vehicles) or smart cities – just to mention a few. Imagine having all these business partners net-worked together, accessing the same data of a digital vehicle twin, what a huge potential for additional value creation!

Having a digital vehicle twin as part of a network, will improve the data quality and creates opportunities by having aggregated data. This may sound simple to do so: create a digital twin in a repository, check data quality regularly and make it available to all parties in a network. But in reality, to ensure high quality (complete) data, that is available to everyone within the operating company as well as to external partners is not a trivial task. In addition, there are not only technical challenges, there are also cultural challenges. This sort of collaboration requires a mindset change for an industry where ring-fencing data has been considered the norm in the past.

With the help of SAPs Industry Cloud, we will implement an old but very true thought within the industry:
“The whole is greater than the sum of its parts.” (Aristotle, 384 BC – 322)

What are your thoughts on this trend?

What would need to change within the automotive industry to make information securely available to other parties?

Will the end customer benefit enough to be willing to provide additional information?

This is the first blog post in a series of three. In the next post we will showcase how SAPs Industry Cloud strategy plays out in regards to this trend. In the third post we are super thrilled to announce and present insights into our first industry cloud solution that will directly address this trend and provides an answer to the challenges. Stay tuned!

To find out more about trends impacting the automotive industry read out our intelligent enterprise white paper for automotive.

A big "thank you!" to my my colleague Andreas Klaschka, who I worked with writing this blog post. We are both part of the SAP Automotive Industry Business Unit (IBU). The Automotive IBU is a global team that represents SAP in the Industry and is responsible for driving sustainable business growth, customer satisfaction and solution completeness. The IBU Automotive team ensures the delivery of end-to-end solutions for the Automotive industry addressing current and future customer needs, and it enables the sales and consulting organization.